Metro Bank's plan to expand its High Street branch network has come under fire from the bank's co-founder, Anthony Thomson, who warned on Tuesday that the strategy could hamper the bank's future. This critique comes despite a funding deal designed to bolster financial stability, and contrasts with the CEO Daniel Frumkin's intent to continue the expansion as a new chapter for the bank.
Thomson, who is the former chairman of Metro Bank and currently head of Atom Bank—an online-only bank—raised concerns about Metro's financial challenges. These include an accounting scandal that led to executive departures and a rejected request to lower mortgage lending reserves, which resulted in a 20% drop in share price.
Despite these setbacks, Metro Bank maintains its financial strength and regulatory compliance. The funding deal saw Spaldy Investments, owned by Colombian billionaire Jaime Gilinski Bacal, take a controlling 53% stake with a £102 million investment.
Thomson criticized Metro Bank's commitment to its expensive branch network, which includes unique features such as water bowls for dogs, coin counting machines, and safety deposit boxes. His critique comes in an era where banking customers are increasingly turning to online services, leading to the closure of three in five UK bank branches.
Despite this trend, Metro Bank, which has 2.7 million customers and 76 branches across the UK, plans to open 11 more branches as part of a £30 million per year cost-cutting initiative under CEO Dan Frumkin. Amid concerns about its balance sheet, the Bank of England had considered potential buyers for Metro before it secured a £325 million capital raise and £600 million debt refinancing deal.
This deal transferred control of Metro Bank to Gilinski, who is based in his "Billionaire Bunker". Despite Thomson's concerns and his description of the situation as "terrible to see what has happened", Gilinski maintains his belief in the viability of Metro's branch-based model.
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